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Lufthansa To Slow Down On Acquisitions  
User currently offlineNYCAdvantage From United States of America, joined Sep 2009, 355 posts, RR: 0
Posted (3 years 1 month 10 hours ago) and read 5660 times:

Lufthansa’s new chief executive has signalled that acquisitions are a low priority for the German national airline, as it focuses on defending its European markets and heads off threats from its Gulf competitors.

That said, almost kill the speculation that Lufthansa would soon seek to take over SAS, the Scandinavian airline, Poland’s Lot, or even the hope to get "Virgin Atlantic" like some people here has hope. in other words they will prefer defending its European markets and heads off threats from its Gulf competitors. Will this mean that any consolidation will be left to AIG group and AF/KLM?
http://www.ft.com/cms/s/14ffed52-50a6-11e0-9e89-00144feab49a.html

16 replies: All unread, jump to last
 
User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 800 posts, RR: 1
Reply 1, posted (3 years 1 month 10 hours ago) and read 5599 times:

I'm not surprised by this. LH has to make its current acquisitions profitable (bmi, Austrian etc) before spending money on further acquisitions. And I don't think spending more money buying VS is the answer to turning BD around.

I have a lot of respect for what LH has achieved over the past few years and it seems sensible to focus on pursuing organic growth through its current hubs and operational/financial improvement rather than expanding through acquisitions for the sake of it.


User currently offlineatcsundevil From United States of America, joined Mar 2010, 989 posts, RR: 2
Reply 2, posted (3 years 4 weeks 1 day 17 hours ago) and read 4728 times:

These acquisitions could only move at that pace for so long. Not only should they build up cash reserves after their recent spending sprees, they need to ensure their investments begin turning profits (BD, for example) before making further investments. Not only that, but gobbling up so much of the European market in such a short period stifles adequate competition and could fuel speculation of unfair practices or creating a monopoly. Most of us know this to be untrue, they are simply a well-operated company using their investment powers to save jobs and fix troubled carriers. I think that focusing on their current assets and building cash reserves for large investments within their existing company is key given the growing influence EK has on the European long-haul market, not to mention the other European competitors like KL/AF, AB, or BA. Smart move, in my opinion.


If I wanted your opinion, I'd give it to you!
User currently offlineLJ From Netherlands, joined Nov 1999, 4366 posts, RR: 0
Reply 3, posted (3 years 4 weeks 1 day 17 hours ago) and read 4719 times:

Quoting atcsundevil (Reply 2):
These acquisitions could only move at that pace for so long. Not only should they build up cash reserves after their recent spending sprees, they need to ensure their investments begin turning profits (BD, for example) before making further investments

Plus they probably will buy the remainder of SN (their option can be exercised as of April this year). We'll see how fast they make a decision on this purchase.


User currently offlineatcsundevil From United States of America, joined Mar 2010, 989 posts, RR: 2
Reply 4, posted (3 years 4 weeks 1 day 17 hours ago) and read 4674 times:

Quoting LJ (Reply 3):

I'd guess not too long, provided they know it will be making a profit. When they bought BD, they knew they were more or less needing to flip the airline from a failing piece of crap into something which can be successful and sustainable. Those are the investments LH should avoid for the near future. Investing further in their current assets and bringing in more profit are very worthwhile investments (obviously), and I feel like SN would fall under that category.



If I wanted your opinion, I'd give it to you!
User currently offlineairevents From Germany, joined Jan 2002, 865 posts, RR: 2
Reply 5, posted (3 years 4 weeks 1 day 16 hours ago) and read 4622 times:

Or maybe it is just strategic talking and they are very close to finishing a new deal?


www.airevents.com
User currently offlineLXA340 From Switzerland, joined Nov 2006, 2117 posts, RR: 4
Reply 6, posted (3 years 4 weeks 1 day 11 hours ago) and read 4192 times:

Quoting airevents (Reply 5):
Or maybe it is just strategic talking and they are very close to finishing a new deal?

I wouldn't be suprised if LH will make further acquisitions in the future, however for now they need to focus to first get their current acquisitions, BMI, SN and OS profitable. Once that was acchieved they can focus on further acquisition if it will be economically feasable. We all know from the past what happens if airline CEO's go on a uncontroled shopping tour as it was the case with Mr. Brugisseur and company from the old Swissair. They had a growning portfolio of unprotitable airlines and companies and at some point everything colapsed and I am sure Mr. Franz and LH will not do that. They will continie to shop in the future however under control  


User currently offlinesabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 47
Reply 7, posted (3 years 4 weeks 1 day 7 hours ago) and read 3759 times:

FWIW, SN has turned a profit of €6M over 2010 according to unaudited results. It's not much, but it means the airline is profitable in a very difficult environment, and thus doing better than OS or BD...
Will be interesting to see if LH takes them over in full this year, or decides to wait.


User currently offlinethediplomat From Ireland, joined Jun 2006, 382 posts, RR: 7
Reply 8, posted (3 years 4 weeks 1 day 7 hours ago) and read 3678 times:

Quoting LXA340 (Reply 6):
however for now they need to focus to first get their current acquisitions, BMI, SN and OS profitable

They also need to get the CASK on LH regional down.

Quoting sabenapilot (Reply 7):
SN has turned a profit of €6M over 2010 according to unaudited results. It's not much, but it means the airline is profitable in a very difficult environment, and thus doing better than OS or BD

Wonder what the combined profits on OS BD LX and SN are.
What was the total investment for the airlines?
How long will it be to payback the investment?

Then lets decide if LH are make excellent investment decisions.


User currently offlineSR4ever From Luxembourg, joined Mar 2010, 799 posts, RR: 1
Reply 9, posted (3 years 4 weeks 1 day 2 hours ago) and read 3093 times:

Quoting LHRFlyer (Reply 1):
And I don't think spending more money buying VS is the answer to turning BD around.

How come? BD is too small and weak. VS could be the missing piece of the jigsaw.

Quoting atcsundevil (Reply 2):
Smart move, in my opinion.

Not so much.

LH should indeed be weary of dispersing resources too quickly into much smaller carriers, but there are 3 airlines which they should not let move to another alliance, namely:

- TP, for its Brazil and Africa markets

- SK, in view of its founding membership of Star

- LO, in view of the Polish market


User currently offlinejfk777 From United States of America, joined Aug 2006, 8090 posts, RR: 7
Reply 10, posted (3 years 4 weeks 22 hours ago) and read 2778 times:
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Quoting SR4ever (Reply 9):
LH should indeed be weary of dispersing resources too quickly into much smaller carriers, but there are 3 airlines which they should not let move to another alliance, namely:

- TP, for its Brazil and Africa markets

- SK, in view of its founding membership of Star

- LO, in view of the Polish market



SN, BMI, SWISS, Austrian and LH are all Star airlines. SAS seems like the crowning airline to finish Lufthansa's European family but a buyer from another alliance group would be better for SAS. There are 8 Star airlines in Europe but only 3 OneWorld airlines and 3 Skyteam.

The British and the Scandinavians have always gotten along with each others. What does Star do for SAS that is so great ? Feed it Thai's connecting traffic in Copenhagen, ok those two have decades of relationships but SAS shouldn't stay in Star just for THai.

Tap would probably be better with IAG if the Spanish and the Portuguese could ever get past their cultural differences. To reach its full potential Lisbon has to be a hub for more then Brazilians. Brazil is served by all big European airlines, these airlines will expand flights to GIG and GRU.


User currently offlinekiwiandrew From New Zealand, joined Jun 2005, 8490 posts, RR: 14
Reply 11, posted (3 years 4 weeks 21 hours ago) and read 2728 times:
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Quoting jfk777 (Reply 10):
SN, BMI, SWISS, Austrian and LH are all Star airlines. SAS seems like the crowning airline to finish Lufthansa's European family but a buyer from another alliance group would be better for SAS. There are 8 Star airlines in Europe but only 3 OneWorld airlines and 3 Skyteam.

Your numbers are a little bit out by my reckoning .


OW airlines BA / IB / AY / MA ( and Air Berlin is joining next year ) - that is 4 with a 5th on the way

Skyteam AF / KL / AZ / OK / UX / RO - that makes 6 Skyteam carriers .


Star TP / JK / BD / SN / SK / LH / LO / A3 / JP / OU / KF / OS / LX 13 Star carriers in Europe*



* or 14 if you count TK since IST is on the European continent geographically .



Moderation in all things ... including moderation ;-)
User currently offlineLJ From Netherlands, joined Nov 1999, 4366 posts, RR: 0
Reply 12, posted (3 years 4 weeks 15 hours ago) and read 2484 times:

Quoting airevents (Reply 5):
Or maybe it is just strategic talking and they are very close to finishing a new deal?
Quoting SR4ever (Reply 9):
LH should indeed be weary of dispersing resources too quickly into much smaller carriers, but there are 3 airlines which they should not let move to another alliance, namely:

- TP, for its Brazil and Africa markets

- SK, in view of its founding membership of Star

- LO, in view of the Polish market

Only SK and TP are strategically important for Star. LO is not important as it doesn't add much to what LH can't do on its own (they can easily deploy a few flights to Polish cities from thei MUC or FRA hub if they want). However, I don't think many (other than TK) are interested in LO. AF/KL certainly not (at least not as an investment). They're too busy in other markets (though they may be interested in SK).

Quoting jfk777 (Reply 10):

The British and the Scandinavians have always gotten along with each others. What does Star do for SAS that is so great ? Feed it Thai's connecting traffic in Copenhagen, ok those two have decades of relationships but SAS shouldn't stay in Star just for THai.

It's that Star needs SK to make sure oneworld isn't getting a stronger foothold in Scandinavia (at least if you follow the rule that Finland isn't in Scandinavia like what's said in another thread). At present, Scandinavia is divided by the three alliances as Star has SK (Skyteam has KL and oneworld has AY). If SK defects to oneworld, Star would loose Scandinavia. One can argue that LH then must increase flights to Scandinavia, but I doubt they want to do this.

Quoting jfk777 (Reply 10):

Tap would probably be better with IAG if the Spanish and the Portuguese could ever get past their cultural differences. To reach its full potential Lisbon has to be a hub for more then Brazilians.

I don't see any benefit for TP to team up with IAG as IAG is already expanding in Brazil via IB. IB and TP are too close to each other to complement.


User currently offlineEBGARN From Sweden, joined Jan 2008, 222 posts, RR: 0
Reply 13, posted (3 years 4 weeks 15 hours ago) and read 2425 times:

Quoting jfk777 (Reply 10):
The British and the Scandinavians have always gotten along with each others.

In private relations and politics, yes. In corporate culture, not so much. I'd say it would be quite a clash.



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User currently offlinekelual From Spain, joined Jul 2008, 79 posts, RR: 0
Reply 14, posted (3 years 4 weeks 13 hours ago) and read 2284 times:

Quoting EBGARN (Reply 13):
I don't see any benefit for TP to team up with IAG as IAG is already expanding in Brazil via IB. IB and TP are too close to each other to complement.

Imagine if LH had the same vision as you have, they wouln't have bought Swiss, Brussels Airlines and Austrian as they are in neighboring contries and "too close to each other to complement". Or Air France when they bpught KLM.
TAP is a priority for IAG. Time will tell.

[Edited 2011-03-21 04:06:04]

User currently offlinejfk777 From United States of America, joined Aug 2006, 8090 posts, RR: 7
Reply 15, posted (3 years 4 weeks 12 hours ago) and read 2164 times:
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Quoting LJ (Reply 12):
I don't see any benefit for TP to team up with IAG as IAG is already expanding in Brazil via IB. IB and TP are too close to each other to complement.

IF Tap and IB can't get together I guess Aer Lingus should not join OneWorld or merge with IAG ? Before some one tells me I know Aer Lingus was in OW before. Dublin would be a great airport for IAG to hub and use as a relief hub from LHR to North America. With all the traffic Aer Lingus feeds into LHR and BA a merger in the long term would be a benefit to Ireland as EI is too small.


User currently offlineatcsundevil From United States of America, joined Mar 2010, 989 posts, RR: 2
Reply 16, posted (3 years 3 weeks 6 days 15 hours ago) and read 1668 times:

Quoting SR4ever (Reply 9):

As I said, in my opinion. I'm not going to tell you your opinion is wrong, so don't tell me mine is. Of the carriers you listed, the only realistic option for LH in the near-term is SAS. Even then, I highly doubt they would purchase a controlling interest for some time...IN MY OPINION.



If I wanted your opinion, I'd give it to you!
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